How Silicon Valley’s housing market reached its saturation point, and how its most vulnerable residents stay afloat

Less than two miles down El Camino Real from the mouth of Stanford’s sprawling, idyllic campus lies the Buena Vista Mobile Home Park.

“It’s next to a private school and down the street from a Tesla dealership,” said Kayley Gould ’23, who’s been tutoring kids at Buena Vista for the last two years. “That’s the only way I can try to describe the contrast.”

Buena Vista itself is comprised of neat rows of unassuming pastel modules, large potted plants flowering over at the edges of the street and over 400 residents whose survival in Palo Alto depends on the affordability of their living situation.

But in 2012, the park’s owners announced plans to sell the land, and all its residents were suddenly faced with impending eviction. The high demand and low supply of housing in Santa Clara County, coupled with a spiking area median income, had caused land values in the county to appreciate so dramatically that the land on which the park resides was worth an estimated $36 million. Residents paid as little as $1,000 a month — roughly a third of Palo Alto’s average monthly rent.

If Buena Vista was developed into market-rate housing, many of its former residents would be out of options. The Dailyreported in 2016 that psychologists were brought in to consult with children who were having nightmares about their impending eviction. There would be no way to survive in the area they call home.

The dire situation of Silicon Valley’s housing market is riddled with crises like the ones that Buena Vista’s residents faced back then. Not all of them, however, have such a happy ending: In 2017, Santa Clara County purchased the park for $40 million, funded in part by money paid by Stanford under its current General Use Permit (GUP), and the park remains open today.

The existence of affordable housing options requires a complex nexus of public funds, federal and local government agencies, private investment and community interest. When all these different parts align, you get stories like the preservation of Buena Vista. More often than not, however, Santa Clara County’s housing insecure residents are navigating a housing market defined by bureaucratic roadblocks, chronically underfunded federal programs and units that are affordable on paper but can still pose a huge burden to some renters. While Stanford and Big Tech have recently ramped up their support for affordable housing, county officials and local advocates are questioning how much longer the current structures of housing support will suffice.

Threats to mobile homes

Housing options like the Buena Vista Mobile Home Park are classified in housing policy as naturally occurring affordable housing (NOAH), an unsubsidized form of affordable housing that is the most common form of lower-market value housing in the United States. But as Silicon Valley’s housing market exploded in conjunction with the tech industry, NOAH options have become increasingly rare and unstable.

“Where land is very valuable and there’s a lot of incentives, there’s a point at which you can make so much money off redeveloping the place and making it a market property that you have a huge financial incentive to evict, or end that housing option for the people who live there, and build something new,” said Katherine Harasz, executive director of the Santa Clara County Housing Authority (SCCHA).

Ray Bramson, a current Stanford student and Chief Impact Officer at Destination:Home — Santa Clara’s preeminent homelessness support organization — has watched the crisis exacerbate over the last decade.

“I cite this statistic a lot, but from 2000 to 2014, the cost of living [in Santa Clara] went up by 24%, but wages for the lowest income workers actually declined by 7% in that same time period,” he said. “It’s costing more to live here, but the poorest people are making less money. So it’s this huge struggle and we’re seeing it on the streets. Thousands of people are homeless.”

As NOAH options disappear, and the housing market squeezes out the lowest earners, Santa Clara’s most vulnerable residents are forced to rely on institutional support to protect them from living on the streets.

The saturated housing market

Harasz attributes the current over-saturation of the rental market to the 2008 housing crisis. Nationwide, she explained, the rental market has borne the brunt of historically low home ownership rates. Thanks to the dramatic income disparity between Silicon Valley’s highest and lowest earning residents — the upper end of which is largely thanks to the presence of giants like Stanford, Google or Facebook — the housing shortage has been acutely felt by the region’s poorest residents.

“It really is all over the country,” she said. “I just think we were ground zero.”

While the Valley’s richest residents get exponentially wealthier, its poorest ones suffer from the combination of stagnant wages and a skyrocketing area median income. According to the most recent census data, Palo Alto’s median household income was $147,000 a year — compared to about $50,000 nationally.

Santa Clara County has tens of thousands of residents who qualify as “extremely low income,” meaning they earn at or below 30% of the area median income, Bramson explained.

“We know that people in that income range, about three-quarters of them are severely rent burdened, which means they’re paying 50% of their income, or more, towards rent,” he said. “One financial emergency, one loss of a job, one sickness in the family and they are on the streets. Almost without question.”

In order to stay housed, these families are left to rely on the affordable housing programs that the government maintains. Even then, these options aren’t spared from the threatening uncertainty that permeates the housing market for vulnerable families. In 2011, as part of Gov. Jerry Brown’s attempt to bail California out of a $25.4 billion budget deficit, he slashed funding to redevelopment agencies across the state. With the county’s predominant funding vehicle for subsidized housing now defunct, affordable housing projects in Santa Clara lacked a reliable source of financial capital — until 2016, when Santa Clara voters approved a $950 million housing bond known as Measure A.

According to Bramson, the county government has since embraced its role as a safety net for the housing insecure, and the funds that the bonds provide have poured “tremendous, tremendous energy” into the region’s anti-homelessness efforts.

“What was unique about [Measure A], besides being the largest housing bond passed in the county, is that 700 million of it was dedicated specifically for extremely low income households,” Bramson said.

In 2015, Destination:Home and local government agencies approved the county’s first plan to end homelessness: a “bold” goal of creating 6,000 housing opportunities in the next five years, Bramson said.

“We have 21 projects in the pipeline right now with Measure A, almost 2,000 new units, all coming from measure A and in partnerships with cities like San Jose, who are doing what they can,” he said. “And Katherine [Harasz]’s agency is making this all possible because they’re attaching project-based vouchers, Measure A vouchers, to the supportive housing units to make them financially feasible.” Over 8,000 homeless people in the county have been housed since the plan’s implementation.

The county’s primary means of supporting the housing insecure is through the construction of deed-restricted units, the most conventional form of affordable housing. Deed-restricted units are contractually required to rent to residents who earn under a certain income level. Most cap renters’ incomes at 80% of the area median income, with rents scaled accordingly as that percentage gets lower.

The SCCHA operates nearly 30 affordable apartment complexes in the county, while approximately 180 of Stanford’s community housing units have some kind of deed restriction. Since rent often won’t cover construction costs, the construction of deed-restriction units is almost always contingent on private investment or taxpayer dollars. In exchange for funding such projects, investors receive federal tax credits.

“These are true public private partnerships,” Harasz said.

Affordable housing is an attractive investment for private dollars, she explained, because the area median income is so high, even deed-restricted rents can be relatively profitable.

But that high AMI poses a serious question for residents working minimum-wage jobs, or for those dependent on fixed income programs like social security or disability, whose incomes have not adjusted in conjunction with the region’s. Even affording these deed-restricted units becomes a significant challenge.

“You will find seniors in Santa Clara County who are 80 and 90% rent burdened,” Harasz said.

In the absence of available — or affordable — deed-restricted units, lower income families have a chance to survive in the non-subsidized rental market by securing a Section 8 housing voucher. With a voucher, participants can choose from a predetermined list of market rate units, but pay only 32% of their monthly income towards their rent, while the Santa Clara County housing authority makes up the difference.

For the housing insecure, especially those earning at 50% or less of the area median income, Bramson likened a Section 8 voucher to a golden ticket: Recipients have the freedom to choose where they want to live and the security that they’ll be able to make rent.

It’s also about as hard to obtain: Vouchers are awarded via lottery system, and there are around 4,000 eligible families on the waitlist, which has been closed since 2006. An automated email response from the Section 8 office urges those in immediate need of assistance to look elsewhere, as the program receives only 25% of its necessary funding from the federal government.

Even with a “golden ticket,” the rental market can still be unfriendly for renters without high financial standing.

“There’s so few vacancies [that] it’s very hard for folks with these vouchers to find a place to rent in the market,” Bramson said.

In addition to the sheer lack of available spaces, voucher holders are competing for these coveted apartments against renters with significant financial wealth.

“We have such a high income level in this country and we have a lot of people who have access to stock options and higher salaries,” Harasz said. “And they’re in the rental market displacing people who might be otherwise renting those apartments, which would be people who are the service workers of our community.”

Stanford’s impact

The question of affordable housing has long defined Stanford’s relationship with the County. It lay at the center of the University’s ultimately unsuccessful attempt to renegotiate its GUP last fall, throughout which neither side could agree on just how much responsibility Stanford had to alleviate the crisis. Stanford withdrew its proposal after negotiations reached a standstill over the issue of a development agreement, which would codify all additional housing the University had to provide, preventing the county from demanding additional benefits for the 16-year duration of the agreement.

“I say this a lot, but this challenge that we’re experiencing has been decades in the making, and no one group is entirely to blame, and no one group is going to solve it either,” Bramson said. “But everybody needs to play their part and contribute.”

In addition to the 180 official deed-restricted units the University operates in residential communities like Stanford West for University employees, the University’s Land, Buildings and Resources (LBRE) counts graduate student housing as a part of their affordable housing portfolio.

“All of Stanford’s rental housing that we provide for students and faculty and staff are offered at a discount to the market,” said Whitey McNair, executive director of faculty and staff housing at LBRE.

LBRE’s engagement with the community beyond Stanford has expanded as the area’s housing crisis has worsened, McNair said.

In some developments, like the new apartment complex LBRE is constructing in Portola Valley, Stanford plans to preference these deed-restricted units to renters from the local community. Stanford is also in the process of building a 175-unit apartment building in Redwood City, 37 units of which will be deed-restricted units, as well as a development in Portola Valley of 29 single-family homes, 12 of which would be affordable for lower-earning families.

On campus, the new Escondido Village Graduate Residences will bring an additional 1,400 units of graduate student housing. Most of Stanford’s graduate housing options are priced at levels considered affordable for the region, although some students have complained that the rents are still too steep for their graduate school stipends. According to McNair, Santa Clara will count these new units in their Regional Housing Needs Allocation (RHNA) number — a California state law that outlines how many affordable units each county is required to create.

“Traditionally, the County has utilized Stanford’s graduate student housing to meet their RHNA allocation,” McNair said. “Affordable units don’t always have to be that traditional [below market rate] unit.”

McNair said the University is “always looking to increase” the number of affordable housing units it provides.

“I think of Stanford as one of the largest providers of affordable housing in the region,” she said. “It’s difficult to imagine a future in which Stanford isn’t actively providing more housing, because of the challenges of housing in the region.”

When it comes to financing affordable housing, Stanford faces two major obstacles: the cost borne by the University, and the bureaucratic roadblocks to getting such projects approved.

“Rents generally don’t cover construction costs. That’s not deterring Stanford, but it is a big investment, if you will — it’s not like the University has unlimited resources,” said Jean Snider, associate vice president for real estate with LBRE.

“There’s a lot of local opposition to any new housing development,” she added. “There’s opposition to any new change or growth, there are impacts to schools, traffic — it’s all of those impacts that are there whether it’s affordable or not, and we have found there’s a lot of opposition. That’s kind of a norm around here.”

In 2013, for example, Palo Alto voters rejected the city council’s unanimous decision to build 72 low-income senior and family homes on an empty lot in the city’s south side. Many objections were purely aesthetic: “No” voters cited concerns about traffic, ugly architecture and parking issues.

However, critics of Stanford’s affordable housing policies argue that the school’s efforts don’t match the huge stress that the University’s presence exerts on the area’s housing market. At one of the final city council hearings to discuss approval of the GUP, student group Stanford Coalition for Planning an Equitable 2035 (SCoPE 2035), organized a rally in which protestors urged the administration to up their housing support in order to truly offset the University’s impact, wearing large buttons emblazoned with the slogan “FULL MITIGATION.”

“It’s clear that there’s a nexus when we create new services, when we create new job centers, when we create new buildings,” Bramson said. “It creates a need for more affordable housing, because it creates a need for people who provide services to that housing: the janitors, gas station attendants and heck, even now the teachers. This whole range of people who need a place to live too.”

The conditions of Stanford’s current housing support efforts were codified by the 2000 GUP. Under the agreement, Stanford must pay a fee to the county in exchange for the development of new academic spaces on campus. This “linkage fee” is currently set at a rate of about $20 per square foot of new development. As of 2016, Stanford had paid $25.7 million in affordable housing contributions, which goes to the creation and maintenance of affordable developments via the county.

Yet according to Ky Le, the director of Santa Clara’s Office of Affordable Housing, even these conditions don’t fully counteract the estimated impact of Stanford’s continuous expansion.

“I think it’s true that the linkage fee that we established, or that the board established, is sort of much higher than what other jurisdictions are charging — but even that is half of what we really could have applied, if we wanted to fully mitigate that affordable housing impact,” he said.

Associate Director of University Communications Joel Berman, however, questioned Le’s analysis, given that the vast majority of approved housing impact fees approved by all jurisdictions in the county are typically less than 10% of their maximum possible limit.

“Santa Clara County set a fee that is almost double the next highest fee in the area, and they chose to impose it just on Stanford, a nonprofit academic institution that builds facilities with far less impact on affordable housing demand than traditional office development,” he wrote in an email to the Daily.

Beyond the Campus Drive loop

Facing a similar pressure from local government, Silicon Valley’s tech giants have upped their involvement in the housing crisis. In the past year, Facebook and Google both announced billion dollar pledges, while Apple promised $2.5 billion to housing efforts all over the Bay Area.

Some have criticized the companies’ efforts as superficial solutions that don’t do enough to solve the causal issues of the housing crisis.

Bramson, however, was optimistic about the energy that these pledges would inject into local affordable housing efforts.

“There’s a lot of ways that they’re making this funding available,” he said. “They’re providing developers of affordable housing low interest loans, so they can go out and acquire property and get it moving.”

But even with more funding going to affordable housing developments, the Bay Area’s housing and homelessness crisis has structural roots that won’t necessarily be remedied by the addition of new units. Bramson believes the long-term solution to homelessness starts in strengthening the country’s social safety net.

“And that means thinking about whether temporary assistance for needy families, if the resources and the programs associated with that, as directed by the federal government, are sufficient enough to meet the needs of families with children,” he said. “Are we providing sufficient funds for families and children and young adults who come into contact with the child welfare system?”

A 2019 study by the Bay Area Economic Institute think tank found that 28% of all homeless persons in the Bay Area were chronically unhoused, the second highest rate in the country, while 42% had become homeless due to a job loss or eviction. Communities of color faced a homelessness rate that was up to 4.4 times that of the general population, while over 25% of respondents identified as LGBTQ.

“This is a broad group, but it’s people with disabilities, senior citizens, we see a lot of communities of color disproportionately affected by this,” he said. “So it’s not only a deep poverty challenge, it’s also a racial equity challenge as well.”

Facing forward

As median incomes in Santa Clara County continues to rise, former hallmarks of success and stability — education, employment — are no longer enough to guarantee housing in the Bay Area.

“With a high school education, or even with a college education, you see people who simply can’t earn enough money at that first job, or that service sector job, to pay the rent,” Harasz said. “I think the disparity between incomes people are actually earning and the cost of renting an apartment is one of the reasons we see people living in overcrowded conditions, substandard conditions, or with no structure around them at all.”

Without large-scale structural changes, especially at the state level, Le is unsure that current measures will be enough to permanently stabilize the market.

“I’ve said in the past: we will spend our housing bond funds, meet our production goals, and yet we could do all of that and still be in an affordable housing crisis five to ten years from now,” he said. “We have to begin to reengineer the relationships and expectations that people have with government, and government’s responsibility and authority to build affordable housing.”

Bramson, on the other hand, sees changes at the federal level as a necessary precursor to the country’s ability to permanently end the crisis. The U.S. Department of Housing and Urban Development’s budget has effectively been flat since the 1980s. County-level programs have been chronically underfunded as a result, Bramson said, and the effects are acutely felt by the nation’s most vulnerable populations.

“They’re all saturated,” Bramson said of the multiple housing assistance programs he oversees. “Homelessness prevention, we’re serving 1,500 people—that’s about 20% of those asking for support. Charities Housing opened a site called Metropolitan North on Monterey, and it was 70 units of deed restricted affordable housing, and for every one unit that they opened, they received 70 applications. There are so many very poor people living in our community right now, and it’s harder and harder for them to survive.”

Contact Grace Carroll at gac23 ‘at’ stanford.edu.

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